Critiques from inside the World Bank

While my blog posts seemed to elicit a fair number of comments, I had been wondering how many of them, if any, were coming from my World Bank colleagues. Last Friday, I got to find out. Our Internal Communications department ran a story on the Bank’s intranet with the headline “The effects of the global recession on Africa will be permanent, says Africa Chief Economist.” The story then linked to my blog post, “Why aid to Africa must increase”. My first reaction to some of the comments was “Ouch!”

One person said, “[Please] note that this is the same man who was saying (not too long ago) that South Asia would not be impacted by the crisis!” Touché. I had a blog post in January 2008 in my former South Asia blog that took the forecast for U.S. economic growth at that time, and inferred that the effect of the subprime crisis on South Asia would be mild. But most people were not forecasting such a big recession in the U.S. and elsewhere at that time. Of course, the bigger recession had a bigger impact on South Asia, although every South Asian country benefited from the fall in oil prices.

Another person said: "The effects of global recession on Africa will be permanent! What nonsense. Who is the presumed seer who knows all about the future? And what will the effect on other places be? This is not a conversation rather it is purveyance of stereotypes under the guise of analysis, something that is very common at this institution. Disgusted."

I’m sorry he or she is disgusted, but I was referring to specific effects, such as children being pulled out of school or infants dying before their first birthday. It doesn’t take a "seer” to realize these are permanent effects.

Finally, there was a comment that was reminiscent of some I received on the original blog post: “This is a very politically correct and highly convenient argument to make. Sure, let's pump in more aid into a continent that is already reeling with aid dependency, and where aid has done so little. Can we all PLEASE be a bit more responsible before calling for ‘more aid’?”

It’s good to know these debates are going on inside the World Bank too.

Comments

TO: Chief Economist of Africa Region at The World Bank Group
Shanta,
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James A.Vestermark

Its interesting that colleagues also find time to be 'real'.
Just this morning i read that oil prices hit $71. even though this is still 400 points behind OPEC's 'fair price', Nigerian politicians and managers of the world largest oil dependent economy must be reveling in this development. but i couldn't help wondering if this is good news? i mean: is the new price increase a mirage or is it too premature to conclude? what're the key driving factors? and is this a signal of early recovery? what effect is the increase likely to have in Africa's resource poor countries (such as Boukina Faso) already sucked in under the economic crisis?

The current financial crisis is generally blamed on feckless bankers, financial deregulation, crony capitalism and the like. While all of these elements may be true, this purely financial explanation of the crisis overlooks its fundamental reasons.The global financial crisis could said to have started in late 2007, or in early 2008 when manufacturing slowed and the first signs of trouble began to emerge. It could also be said that it became a global financial crisis the second any foreign banks started to look as though they weren't doing stable business and didn't have a lot of financial stability, and needed a cash advance from central governments. The key to progress from now on is going to have to be how to avoid extreme boom and bust cycles, and practice fiscal responsibility on the global scale like we would with personal finance issues, so no huge payday loans are needed in the next global financial crisis.

For those over 50, when we think about banks, we think about our neighbor who operates the local bank that gave our neighbors mortgages. Not any more. Now we are dealing with huge multinational banking corporations. In 1989 the five largest firms controlled just 7% of the mortgage servicing industry; by 2007, the five largest firms controlled 46%. The Nation tells us that after Bank of America merged with Countrywide, three banks, Bank of America, Wells Fargo and Chase controlled 48% of the nations $11.5 trillion in mortgages. These banks have become so large that any financial problems they meet will become the nations problems. And indeed that has happened. Democrats accept the money to do Gods work.It's a reform that will make prescription drugs more affordable for millions of seniors and restore a measure of fairness. Its a help to people's financial crisis if the drug price will be discounted 50 % of the the price.

The World Bank is the largest financier of education, health, nutrition and environmental projects in the world today. It has made a major effort at stretching out his hand to build partnerships not only with NGOs (nongovernmental organizations) and civil society, but also with other international institutions, financiers, private foundations and the private sector. The new way of doing business has to be more than just improving the quality of the interventions that the bank is responsible for; they have to build a much greater partnership in dealing with these issues. That would be the most welcome new evolution.

The current financial crisis is generally blamed on feckless bankers, financial deregulation, crony capitalism and the like. While all of these elements may be true, this purely financial explanation of the crisis overlooks its fundamental reasons.The global financial crisis could said to have started in late 2007, or in early 2008 when manufacturing slowed and the first signs of trouble began to emerge. It could also be said that it became a global financial crisis the second any foreign banks started to look as though they weren't doing stable business and didn't have a lot of financial stability, and needed a cash advance from central governments. The key to progress from now on is going to have to be how to avoid extreme boom and bust cycles, and practice fiscal responsibility on the global scale like we would with personal finance issues, so no huge payday loans are needed in the next global financial crisis.

Yes I couldn't agree more, it's simply due to people taking too many risks, because it's worked before, and due to their incompetence the people of Africa are deeply affected, it's very upsetting to be honest. Thankfully all good or bad things eventually come to an end, the economy will eventually recover, I just hope the bankers, government and have learnt their lesson.